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NATIONAL ASSOCIATION OF POSTMASTERS OF THE UNITED STATES
V O L U M E 9 , I S S U E 2 F E B R U A R Y 1 0 , 2 0 1 2
Open Season on the Federal Public Service?
The latest salvo fired at the federal public service was fired by freshman Rep. Dennis Ross (RFL), chairman of the House Subcommittee on the Federal Workforce, Postal Service, and Labor Policy on Tuesday. The House Oversight and Government Reform Committee favorably approved H.R. 3813, the so-called SAFE Act, by a party-line 22-16 vote. The bill would dramatically slice earned retirement security, and impose a regressive 1.5% income tax on the postal and federal workforce. The cuts total $44 billion over 10 years. Specifically, H.R. 3813 would: Increase FERS and CSRS contributions by 1.5% over the next 3 years of all employees Change the FERS computation formula from the high-3 to the high-5 for employees with less than 5 years of federal/postal service Reduce the accrual rate under FERS by 36% for employees with less than 5 years of federal/postal service Eliminate the Social Security Supplement for FERS employees for those who are retiree prior to being eligible for Social Security and who retire after 2012 Instead, an amendment may be offered to apply the savings to “deficit reduction.” That distinction is wasted on those whose earned retirement security is compromised by the legislation. H.R. 7 is being abused as simply another vehicle to reach into the pockets of postal and federal workers. Moreover, whether, or not, the pension cuts would be used to fund highway construction or reduce the deficit, the $44 billion would be used to offset the cost of H.R. 7. NAPUS expects the House Rules Committee to meet by mid-next week to determine which amendments will be allowed for a floor vote. In addition, it will be noteworthy to see whether the GOP leadership permits a vote to strike Article 16 entirely from H.R. 7, or the only amendment permitted relating to Article 16 would be an amendment to apply the savings to deficit reduction. We expect the House to take up H.R. 7 on Friday, February 17, immediately preceding the weeklong Presidents’ Day Recess. Fortunately, the Senate version of the highway construction bill does not target the public workforce. NAPUS members should urge their Representatives to strike Section 16 from H.R. 7.
8 Herbert Street Alexandra, VA 22305 703-683-9027
Public employee pay freezes, retirement cuts and health benefit attacks are par for the course in the current Congress. NAPUS members are among those who are vulnerable to these meanspirited and unjustified attacks. The irony to this shameful legislative charade is that immediately after the Oversight and Government Reform Committee approved the bill, the House Rules Committee pocketed the text of H.R. 3813 and inserted it in a highway construction and transportation funding bill (Article 16 of H.R. 7). It seems as though the “fix-was-in”. It is interesting to note that the Chairman of the Transportation Committee, John Mica (R-FL), a Sunshine State colleague of Rep. Ross who chaired the Federal Workforce Subcommittee in the mid-1990s. It appears, however, that the too -cute-for-comfort legislative ploy was transparent enough that some GOP members want to decouple the cost-cutting attributed to pension reductions from transportation funding.
Senate Postal Bill Stalled for Now
Over the past couple of weeks, consideration of S. 1789, the 21st Century Postal Act , has slipped behind other Senate legislative priorities. On the immediate horizon, a 10-month extension of the Social Security payroll tax holiday will supplant S. 1789 in the legislative pecking order. Complicating prompt consideration of the Lieberman-Collins-CarperBrown bill are concerns being raised within the Senate Democratic Caucus over a limited number of controversial provisions in the bill (e.g., changes to collective-bargaining and the federal workers’ compensation program). In addition, there is pressure to add provisions to the bill to strengthen Postal Regulatory Commission involvement in facility closure and consolidation decision-making, and deny the USPS the opportunity to reduce delivery service standards. In addition, the Congressional Budget Office estimates that the bill would cost about $6.3 billion, and caused pause on the GOP side of the aisle. NAPUS strongly believes that the CBO estimate is disingenuous, since none of the identified funds are the taxpayers’, and it results from refunding the USPS FERS surplus and re -amortizing the pre-funding of future retiree FEHBP liabilities. Moreover, the Office of Personnel Management has calculated that the USPS has overfunded FERS and CSRS by $13.1 billion. (The OPM determination is independent of the projected $55-75 billion USPS overpayment into the CSRS.) Finally, the USPS circulated in the Senate a memorandum, raising questions about its commitment to pursing passable postal relief legislation this year. USPS-promoted provisions excluded from the Governmental Affairs-approved bill or USPS-resisted items Committee, or amendments that may prevail on the Senate floor have tainted the USPS’ 2012 legislative strategy. However, the facts are uncontested. The USPS will be unable to make $11.1 of pre-funding payments in in the current fiscal year — about ½ on August 1 and remainder on September 30. The USPS needs relief from these unjustified payments. In addition, it needs more legislative latitude and incentives to grow its revenue; not simply contract its market reach into irrelevancy, pursuing a kamikaze mission of retail inaccessibility and service cuts. A potential Senate floor vote on which NAPUS will be focusing will be a motion to “waive a point of order” against the bill for violating a Senate budget rule. We expect that an antipostal Senator will raise such a point of order against the bill. NAPUS will push for a waiver, because congressional budget rules are inherently unfair to the USPS and prejudicial to implementing postal relief. In the meantime, NAPUS will continue to work with Senate allies to finetune S. 1789, so that the measure will garner the requisite votes for passage.
Retiree Costs Fully Funded in 21 years
The USPS Inspector General (IG) has concluded that the Postal Service’s future retiree FEHBP liability could be fully funded within 21 years; that is, without any further postal pre-funding contribution. The IG noted that the Postal Retiree Health Fund balance presently stands at $44 billion. Assuming the historical interest rate on special issue government securities of about 4%, the $44 billion would balloon to about $90 billion in 21 years, without additional USPS prefunding payments. In a letter to Sen. Bernie Sanders (IVT), the IG cautioned that this strategy would only provide short-term relief, and only from the onerous annual $5.5 billion FEHBP payment. The IG went on to state that, unlike other public or private entities, the USPS has put together a “war chest” of over $326 billion to address future pension and retiree health obligations. The USPS has already over100% funded its pension obligations. In fact, when future pension and health obligations are combined, 91% of all future obligations are funded. In contrast, the federal government is funded at 42% and military is funded at 27%. Moreover, the IG echoed the Gospel truth that there are no public or private entities that are required to pre-fund healthcare at the USPS’ level. The federal government does not pre-fund at all; only 38% of Fortune 1000 companies prefund. The median prefunding level for those private firms that do prefund is 37%.
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